Journal of Applied Finance & Banking, vol. 3, no. 5, 2013, 1-18
ISSN: 1792-6580 (print version), 1792-6599 (online)
Scienpress Ltd, 2013
The Relative Financial Efficiency of Brazilian Firms and
American Firms in the Manufacturing Sector: A Ratio
Analysis
Parviz Asheghian1
Abstract
This paper evaluates the relative financial efficiency of twenty three matched-pairs of U.S.
firms and Brazilian (BR) firms. In this study, efficiency is measured in terms of
profitability, debt management, asset management, and liquidity management. Paired
comparison is employed and ten hypotheses are tested on the basis of the defined ratios.
Because matched pairs are used, an appropriate test is the Wilcoxon matched-pairs
signed-ranked test. All the data for the study were compiled by the author from Mergent
on Line. These include the most recent five-year time-series data that were available in
2013 for all the ten ratios that were tested. The analysis presented in this paper indicates
the absence of any statistically significant differences between the two sets of firms with
regard to most of the ratios examined, suggesting that the U.S and the Brazilian firms are
similar to each other with respect to their financial efficiency. The only exception is that
BR firms have higher return on equity (ROE) ratios than the United States firms.
JEL classification numbers: F14, F21, F23, F30, L25, M15, Μ40, N60
Keywords: Financial Efficiency, Brazil, the United States, Profitability, Debt,
Management, Asset Management, Liquidity Management, and Financial Ratios.
1
Introduction
A newly industrialized nation, Brazil is the seventh wealthiest economy in the world. It is
also the largest nation by area and population in Latin America and the Caribbean [1].
As one of the so called Bric nations, along with Russia, India and China, Brazil has one of
the world's fastest growing major economies, and its economic reforms have given the
nation new international recognition and influence. [2].
1
Department of Economics, California State University San Bernardino, USA.
Article Info: Received : May 31, 2013. Revised : June 29, 2013.
Published online : September 1, 2013
2
Parviz Asheghian
In recent years, Brazil‟s GDP has grown by an average annual rate of over 5 percent,
which exceeds the growth of the U.S. and Western Europe. This condition has
contributed to the ability of this nation to survive the global financial crisis with relatively
insignificant effects. Brazil was one of the last nations to plummet into recession in 2008
and among the first to resume growth in 2009. Following its economic recovery, Brazil
experienced GDP real growth rate of 7.5 percent and 2.1 percent in year 2010 and 2011,
respectively [3].
Although Brazil‟s rate of economic growth decreased in 2011, and 2012, strong policy
support is predicted to enhance this country‟s rate of economic growth to 4 percent and
4.1 percent in years 2013 and 2014 respectively [4].
Given the impressive rate of growth of GDP in Brazil in recent years, many researchers
have tried to investigate the elements that fuel the Brazilian firms‟ efficiency. However,
no study has examined the relative efficiency of the Brazilian firms and American (U.S.)
firms operating in the manufacturing sector. The purpose of this study is to evaluate the
relative financial efficiencies of twenty-three matched-pair of American and Brazilian
manufacturing firms by employing ratio analysis.
2
Survey of the Literature
There are only a few studies that concentrate on evaluating firms‟ efficiency in Brazil.
However most of these studies concentrate on measuring production efficiency of the
firms under consideration. In this section we review several of these studies and present
their results.
In their study P. Tecles and B. M. Tabak [6] analyze the efficiency of the Brazilian
banking sector over the post-privatization period of 2000-2007. Employing a Bayesian
stochastic frontier approach, they compare across institutions and bank groups. Their
results indicate that large banks are the most cost and profit efficient, confirming the
concentration process observed in recent years. Additionally, they explain that foreign
banks have achieved a good performance by either the establishment of new affiliates or
the acquisition of local banks. The remaining public banks have portrayed improvements
in cost efficiency; however, they are relatively profit inefficient. Finally, they find that the
impact of capitalization on efficiency is positive.
In his study T. Kinda [7] employs a one-step stochastic frontier model for five developing
countries, including Brazil, Morocco, Pakistan, South Africa and Vietnam. He concludes
that foreign firms benefit from a better investment climate, which provides significant
explanation for the higher efficiency of foreign firms as compared to domestic firms. The
article also examines the importance of vertical spillovers, while controlling for the direct
impact of the investment climate on efficiency. The results indicate that firms, especially
small local firms that sell more of their output to multinationals, are more efficient,
indicating the existence of vertical spillovers via backward linkages.
In their study N. Nazmi and J. E. Revilla [8] compare economic efficiency of Brazil, India,
and China. They define economic efficiency as the gap between potential and actual
output for a given input combination and technological factor. Using stochastic
production frontier models, they measure the contributions of factors of production and
technology to growth and estimate non-positive error terms that capture production
inefficiencies in each nation. Their results indicate that China and India had relatively
The Relative Financial Efficiency of BR and U.S. Firms
3
inefficient production in the early 1980s but have since improved production efficiency
substantially. In the same period, production efficiency in Brazil has declined to some
extent from relatively high initial levels. Additionally, the gap between production
efficiency between these nations has narrowed significantly, implying more rapid growth
in China and India as compared to Brazil.
O. Yeboah, V. Ofori-Boadu and T. Li [9], employ Data Envelopment Analysis (DEA) to
measure and compare the efficiency of ethanol production in China and Brazil. They
develop an output oriented model to estimate the extent that output can be proportionally
enhanced without altering the input quantities used in each nation. Their results indicate
that China has been relatively more efficient in ethanol production than Brazil since the
year 2007.
E. P. Ribeiro, V. Prochnik and J. DeNegri [10] examine productivity and growth in the
Brazilian informatics industry (ISIC 30 office, accounting and computing machinery).
This industry which is one of the fastest growing sectors in manufacturing in the world
receives special tax breaks in Brazil. Using both interview method and econometric
model, they investigate this sector after its liberalization. The interviews suggest that firm
growth is based either on product differentiation in the business machines subsector
(using close software complementarities) or retail chains as distribution channels in
computer manufacturing. Their econometric analysis indicates that although the
Informatics Law has an overall positive impact on the firms, its effect on the productivity
growth is not significant. On average, less productive firms receive more Informatics Law
benefit. Their findings cast doubt on the efficiency of R&D incentives in its current form
in Brazil.
N. Mulder, S. Montout and L. Lopes [11] examine the relative labor productivity
performances of Brazil and Mexico in manufacturing as compared to United States,
during the 1970-1999 Period. Using the International Comparisons of Output and
Productivity (ICOP), they compare Brazil separately with the U.S. in 1985 and 1988.
Their results indicate that labor productivity in Brazil was 43 per cent of the U.S. level in
1985, and labor productivity in Mexico was 27 percent of the U.S. in 1988. The
extrapolation to the 1970-99-period indicates that the productivity gaps between the Latin
countries and the U.S widened, especially in the 1980s. Although Brazil was able to
stabilize its productivity differential, Mexico continued to widen its productivity gap
relative to the U.S.
3
The Method of Analysis
In this study, financial efficiency is defined in terms of profitability, debt management,
asset management, and liquidity management. Profitability is measured by return on
assets, return on equity, and return on investment. Debt management is measured by
long-term debt to equity and total debt to equity. Asset management is measured by total
asset turnover, receivable turnover, and inventory turnover. Liquidity management is
measured by quick ratio and current ratio.
The following ten financial ratios are used in the analysis:
1. ROA: Return on Assets =
Net Income
Asset
4
Parviz Asheghian
2. ROE: Return on Equity =
Net Income
Common Equity
Net Income
3. ROI : Return on Investment =
Investment
Long − Term Debt
4. LTDE: LT Debt to Equity =
L−T Debt +Preferred Stock +Common Stock
Total Liabilities
5. TDTE: Total Debt to Equity =
Shareholder ′ sEquity
6. TATO: Total Asset Turnover =
7. RTO: Receivable Turnover =
8. ITO: Inventory Turnover =
9. QR: Quick Ratio =
Assets
Net Credit Sales
Average Account Receivable
Sales
Inventory
Cash +Account Recievable +S−T or Marketable
10. CR: Current Ratio =
4
Revenue
Securities
Current Liabilities
Current Assets
Current Liabilities
The Limitations of the Study and the Sample Size
The problems of measurement in comparative analysis have been discussed by a number
of researchers (see [8] & [9]). Measurement problems, as related to firm comparison,
center around two main issues. First, the choice of industries, and second the kind of data.
As for the first issue, ideally the two groups of firms should be similar with regard to
product heterogeneity and size. They should also operate in a similar environment and
market structure. However, the limitations of the sample size in most of the empirical
studies call for restriction in choosing firms for comparison.
The second question has to do with accounting differences that exist between countries.
These differences might lead to biases in the measurement of the ratios employed in the
analysis. For example, measurement‟s problem could arise because the two countries may
use different procedures for the valuation of income producing assets which affects
income statements. In one country, marketable securities may be treated at the lower of
cost or market value (LCM), whereas cost method could be utilized in another country.
These differences might affect comparability of the two countries with regard to asset
turnover, and profitability ratios.
Today, one of the challenges faced by regulatory accounting agencies globally is how to
diminish or eradicate the asymmetry of information appearing in reports that are prepared
according to the standards of various nations. Numerous international agencies such as
the International Accounting Standards Board (IASB), and the International Federation of
Accountants (IFAC), have tried to develop highly reliable international accounting
standards. In achieving this task, they attempt to foster the merging of different local
The Relative Financial Efficiency of BR and U.S. Firms
5
accounting standards into an international accounting standard. As a result, the
„international financial reporting standards‟ (IFRS) are increasingly acquiring global
acceptance. This is evident by the number of firms that have adopted international
accounting standards in their financial statements. In January 2005, roughly 7,000
companies listed with the European Union converted their statements to the IFRS
requirements [12]. Today, about 113 nations worldwide require or permit IFRS reporting
for domestic listed companies [13].
In the case of our study, Brazil (BR), on July 13, 2007, the Securities and Exchange
Commission of Brazil - Comissão de Valores Mobiliários, or CVM required listed
companies to publish their consolidated financial statements according to IFRSs, starting
with reporting periods ending in 2010. Although the United States still adheres to GAAP
financial reporting, the Securities and Exchange Commission voted on August 27th, 2008
to publish for public comment a proposed „roadmap‟ that could lead to the use of IFRS by
U.S. issuers beginning in 2014.
Given the aforementioned limitations, the findings should be interpreted with caution.
Following the most acceptable criteria set by empirical studies, each pair of firms chosen
in this study consists of one U.S. firm and one BR firm producing similar products and
having approximately the same size. All the data for the study were compiled by the
author from Mergent on Line. These include the most recent five-year time-series data for
all the ten ratios that were available in 2013. Table 1 shows Industry SIC code,
description and number of matched pairs that were selected from the manufacturing sector
in each country.
Table 1: The Industrial Sectors and the Number of Matched Pairs of Firms
Industry SIC code
2812
2819
2833
2834
2851
2865
2869
2875
2911
3312
3313
3317
3321
3357
3441
3443
3531
3751
3661
3711
3714
Total Number of Pairs
Description
Alkalies and chlorine
Industrial inorganic chemicals
Medicinals and botanicals
Pharmaceutical preparations
Paints and allied products
Cyclic crudes and intermediates
Industrial organic chemicals
Fertilizers, mixing only
Petroleum refining
Blast furnaces and steel mills
Electrometallurgical products
Steel pipe and tubes
Gray and ductile iron foundries
Nonferrous wiredrawing & insulating
Metal cans
Fabricated plate work (boiler shops)
Construction machinery
Motorcycles, bicycles, and parts
Telephone and telegraph apparatus
Motor vehicles and car bodies
Motor vehicle parts and accessories
No. of Pairs
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
2
23
6
5
Parviz Asheghian
The Testing of Hypotheses
Paired comparison is used to compare the relative financial managerial efficiency of U.S.
and BR firms. Ten hypotheses are tested on the basis of ROA, ROE, ROI, LTDE, TDTE,
TAT, RTO, ITO, QR, and CR. In all of these cases the null hypothesis states that there is
no difference between U.S. and BR firms with regard to the ratio that is being compared.
The alternative hypothesis explains that these ratios are different. Matched pairs are used,
an appropriate test is the Wilcoxon Matched-pairs Signed-ranked test. This test is ideal
because it is a nonparametric test, not requiring a large sample size. This test gives more
weight to pairs that show a large difference than pairs indicating small ones. In this
manner the Wilcoxon test is similar to the t-test but it deals with ordinal data. This test is
one of the most powerful non-parametric tests. Even for small samples its power is about
95 percent of that of the t-tests (see [14], [15], & [16]). To conduct the Wilcoxon test, first
the differences between each pair, with regard to the ratios that are being compared, are
computed. Then these differences are ranked on the basis of their absolute values. Next,
the sums of the ranks of the positive and negative differences are used as the test statistics
T-, and T+, respectively. Finally, the appropriate absolute T value in each table is chosen
as the test statistic and is compared to the critical value given in the table of critical values
for the Wilcoxon test, for the number of observations (N).
5.1 Profitability
The results of the tests for profitability, measured by ROA, ROE, and ROI, are shown in
Tables 2 through 4. The values of the test statistic (T) in these tables indicate that all of
the null hypotheses of similarities between ROA (Table 2) and ROI (Table 4) cannot be
rejected at the 5% level of significance. ROA similarities mean that U.S. firms and BR
firms are similar in terms of efficiency by which they use assets to generate profit. The
similarities of ROI means that the U.S. firms and Brazilian firms are similar with regard
to the efficiency by which they manage the invested capital to generate profit.
The null hypothesis that ROE of U.S. firms and Brazilian firms does not differ is rejected
at 5% level of significance, indicating that BR firms have higher ROE ratios as compared
to U.S. firms. This means Brazilian firms are more efficient than U.S. firms in terms of
generating income for their shareholders.
5.2 Debt Management
The results of the tests for debt management, measured by LTDE and TDTE are shown in
Tables five and six, respectively. The values of the test statistic (T) in these tables indicate
that all of the null hypotheses of similarities of between the U.S. firms and Brazilian firms
with regard LTDE (Table 5) and TDTE (Table 6) cannot be rejected at the 5% level of
significance. This implies that U.S. firms and BR firms are similar with regard to the
efficiency by which they manage their total debt and long term debts.
5.3 Asset Management
The results of the tests for asset management, measured by TATO, RTO, ITO are shown
in Tables seven through nine, respectively. The values of the test statistic (T) in these
tables indicate that all the null hypotheses of similarities between the U.S. firms and
The Relative Financial Efficiency of BR and U.S. Firms
7
Brazilian firms with regard to TATO (Table 7), RTO (Table 8), and ITO (Table 9) cannot
be rejected at the 5% level of significance. This implies that U.S. firms and Brazilian
firms are similar with regard to the efficiency by which they manage their assets.
5.4 Liquidity Management
The results of the tests for liquidity management, measured by QR and CR are shown in
Tables ten and eleven, respectively. The values of the test statistic (T) in these tables
indicate that all the null hypotheses of similarities between the U.S. firms and Brazilian
firms with regard to QR (Table 10), and CR (Table 11) cannot be rejected at the 5% level
of significance. This implies that U.S. firms and Brazilian firms are similar with regard to
the efficiency by which they manage their liquidities.
6
Concluding Remarks
This study evaluates the relative financial efficiency of U.S. firms, and Brazilian firms,
using a sample of five-year time-series data for a set of 23 matched firms that are chosen
from seven industries.
To the extent that the data are not biased in the context of the limitations set in this study,
the foregoing analysis suggests although Brazilian firms are more efficient than the U.S.
firms in terms of ROE, they are similar in terms of the other two profitability ratios of
ROA and ROI.
The results of the analysis of this study also indicate that there are no significant
differences between the U.S. firms and Brazilian firms with regard to their efficiency by
which they manage their debts, assets, and liqidity.
In an earlier study Liu and O‟Farrell examine the potential differences in financial ratios
between Brazilian and U.S. companies with 60 matched-pairs of companies from three
major manufacturing industries that are most attractive to U.S. investors for the year 2006.
They conclude that Brazilian firms have lower long term debt to total capital, and asset
turnover ratios, but higher duration of payables. This study differs from their study
because each matched pair examined in their study is based on a one-year data in 2006,
but this study employs all the five-year data that were available in 2013.
This study examined the comparative efficiencies of the BR and U.S. firms in terms of
profitability, a debt management asset management, and liquidity, portraying the relative
effectiveness of the executives of these firms in managing their finances. It would be
helpful to compare production efficiencies of the BR firms with the U.S. firms to see if
BR firms are as efficient as their counterparts in the U.S. in managing their production
process. This would require the measurement of total factor productivity, capital
productivity and labor productivity and could be the subject of further research in this
area.
8
Parviz Asheghian
Table 2: The Wilcoxon Test for the Comparison of ROA Ratios of U.S. and BR Firms
𝑛
𝑛
PAIR
DK
ABS
RD PRS
NRS
𝐵𝑅
𝑅𝑂𝐴𝑘𝑖
𝑅𝑂𝐴𝑈𝑆
𝑘𝑖
𝑖=1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
TOTAL
𝑖=1
-249.06
54.11
36.49
18.07
-1.66
3.16
6.66
24.52
-1.40
6.94
-18.55
20.23
27.74
68.99
24.81
7.98
12.05
5.91
-7.38
31.42
-50.98
44.13
-76.86
-54.51
-45.82
36.01
16.33
-691.27
34.11
7.44
46.56
0.60
22.89
4.29
4.26
-6.97
19.79
44.19
22.40
-5.17
28.75
34.17
-29.36
-143.50
22.51
-8.89
-194.55
99.93
0.48
1.74
689.61
-30.95
-0.78
-22.04
-2.00
-15.95
-22.84
15.97
34.71
49.20
-19.38
-14.42
17.22
-22.84
-41.55
60.78
92.52
21.62
-67.97
194.55
99.93
0.48
1.74
689.61
30.95
0.78
22.04
2.00
15.95
22.84
15.97
34.71
49.20
19.38
14.42
17.22
22.84
41.55
60.78
92.52
21.62
67.97
22
21
1
3
23
14
2
11
4
7
13
7
15
17
9
5
8
12
16
18
20
10
19
22
21
1
3
23
14
2
11
4
7
13
7
15
17
9
5
8
12
16
18
20
10
19
T+=143 T-=93
𝑅𝑂𝐴𝑈.𝑆.
𝑘𝑖 = ROA of the kth U.S. firm in the ith yea; i = 1...5; k = ...23
𝑅𝑂𝐴𝑘𝑖𝐵𝑅 = ROA of the kth BR firm in the ith year; i = 1...5; k = ...23
RD = Rank of DK; DK = 𝑛𝑖=1 𝑅𝑂𝐴𝑈.𝑆.
- 𝑛𝑖=1 𝑅𝑂𝐴𝐵𝑅
𝑘𝑖
𝑘𝑖 ; PRS = Positive rank sum; NRS =
Negative rank sum.
The Relative Financial Efficiency of BR and U.S. Firms
9
Table 3: The Wilcoxon Test for the Comparison of ROE Ratios of U.S. and BR Firms
𝑛
𝑛
PAIR
DK
ABS
RD
PRS
NRS
𝐵𝑅
𝑈𝑆
𝑅𝑂𝐸𝑘𝑖
𝑅𝑂𝐸𝑘𝑖
𝑖=1
1
*
2
112.12
3
108.06
4
50.50
5
-2.73
6
5.05
7
16.94
8
62.07
9
-2.23
10
37.84
11
-42.61
12
30.31
13
196.57
14
110.88
15
62.15
16
24.33
17
19.71
18
7.39
19
-24.75
20
59.50
21
-1236.74
22
58.67
23
-90.06
TOTAL
*Data not available
𝑖=1
-3340.03 *
*
*
-534.56
646.68 646.68
85.20
22.86
22.86
20.89
29.61
29.61
*
*
124.30
-119.25 119.25
22.50
-5.56
5.56
60.32
1.75
1.75
1.32
-3.55
3.55
74.38
-36.54
36.54
33.61
-76.22
76.22
12.22
18.09
18.09
-32.96
229.53 229.53
42.30
68.58
68.58
187.49
-125.34 125.34
37.47
-13.14
13.14
-8.02
27.73
27.73
115.10
-107.71 107.71
50.10
-74.85
74.85
-95.34
154.84 154.84
-175.33 -1061.41 1061.41
26.60
32.07
32.07
-1320.29
1230.23 1230.23
19
6
8
15
3
1
2
10
13
5
18
11
16
4
7
14
12
17
20
9
21
19
6
8
15
3
1
2
10
13
5
18
11
16
4
7
14
12
17
20
9
21
T+=125 T- =106
106.00
125.0 106.0
=====10
0
0
𝑈.𝑆.
6
𝑅𝑂𝐸𝑘𝑖 = ROE of the kth U.S. firm in the ith year; i = 1...5; k = 1...21
𝐵𝑅
𝑅𝑂𝐸𝑘𝑖
= ROE of the kth BR firm in the ith year; i = 1...5; k = 1...21
𝑈.𝑆.
𝐵𝑅
RD = Rank of DK; DK = 𝑛𝑖=1 𝑅𝑂𝐸𝑘𝑖
- 𝑛𝑖=1 𝑅𝑂𝐸𝑘𝑖
; PRS = Positive rank sum; NRS =
Negative rank sum
10
Parviz Asheghian
Table 4: The Wilcoxon Test for the Comparison of ROI Ratios of U.S. and BR Firms
𝑛
𝑛
PAIR
DK
ABS
RD
PRS
NRS
𝐵𝑅
𝑈𝑆
𝑅𝑂𝐼𝑘𝑖
𝑅𝑂𝐼𝑘𝑖
𝑖=1
1
*
2
182.97
3
83.17
4
41.99
5
-1.98
6
-2.89
7
37.58
8
123.13
9
-8.23
10
126.07
11
-5.33
12
29.94
13
12.44
14
109.30
15
66.62
16
27.22
17
23.48
18
2.08
19
7.60
20
91.46
21
*
22
9.55
23
43.24
TOTAL
*Data not available
𝑖=1
-6.86 *
-75.19
116.14
26.40
**
142.26
19.08
99.09
10.29
70.53
24.46
13.51
-9.98
56.00
130.84
85.38
-6.19
86.71
79.06
0.15
**
33.69
-1.49
107.78
199.31
68.39
107.78 13.00
199.31 19.00
68.39 9.00
13.00
19.00
9.00
139.37
56.66
222.22
2.06
196.60
19.13
43.45
2.46
165.30
197.46
112.60
17.29
88.79
86.66
91.61
139.37 15.00
56.66 8.00
222.22
20
2.06
1
196.60
17
19.13
4
43.45
6
2.46
2
165.30
16
197.46
18
112.60
14
17.29
3
88.79
11
86.66
10
91.61
12
15.00
8.00
20
1
17
4
6
2
16
18
14
3
11
10
12
43.24
41.75
43.24
41.75
6
5
6
5
T+=209 T-=0
𝑈.𝑆.
𝑅𝑂𝐼𝑘𝑖
= ROI of the kth U.S. firm in the ith year; i = 1...5; k = 1...20
𝐵𝑅
𝑅𝑂𝐼𝑘𝑖
= ROI of the kth BR firm in the ith year; i = 1...5; k = 1...20
𝑈.𝑆.
𝐵𝑅
RD = Rank of DK; DK = 𝑛𝑖=1 𝑅𝑂𝐼𝑘𝑖
- 𝑛𝑖=1 𝑅𝑂𝐼𝑘𝑖
; PRS = Positive rank sum; NRS =
Negative rank sum.
The Relative Financial Efficiency of BR and U.S. Firms
11
Table 5: The Wilcoxon Test for the Comparison of LTDTE Ratios of U.S. and BR Firms
𝑛
𝑛
PAIR
DK
ABS
RD PRS
NRS
𝐵𝑅
𝑈𝑆
𝐿𝑇𝐷𝑇𝐸𝑘𝑖
𝐿𝑇𝐷𝑇𝐸𝑘𝑖
𝑖=1
1
*
2
0.53
3
3.26
4
0.16
5
0.05
6
*
7
0.82
8
3.14
9
0.01
10
6.42
11
9.04
12
*
13
0.23
14
1.42
15
4.06
16
0.08
17
0.11
18
0.12
19
0.65
20
0.07
21
*
22
0.52
23
1.30
TOTAL
*Data not available
𝑖=1
3.61
2.75
2.15
0.24
*
0.48
1.86
*
0.59
4.92
6.67
0.76
3.71
3.71
5.91
0.32
0.69
2.51
0.14
8.99
0.78
*
*
-2.22
1.11
-0.08
2.22
1.11
0.08
10
7
1
-1.04
1.04
6
-0.58
1.50
2.37
0.58
1.50
2.37
4.5
8
12
-3.48
-2.29
-1.85
-0.24
-0.58
-2.39
0.51
-8.92
3.48
2.29
1.85
0.24
0.58
2.39
0.51
8.92
14
11
9
2
4.5
13
3
15
10
7
1
6
4.5
8
12
14
11
9
2
4.5
13
3
15
T+=30
T-=90
𝑈.𝑆.
𝐿𝑇𝐷𝑇𝐸𝑘𝑖
= LTDTE of the kth U.S. firm in the ith year; i = 1...5; k = 1...15
𝐵𝑅
𝐿𝑇𝐷𝑇𝐸𝑘𝑖
= ROE of the kth BR firm in the ith year; i = 1...5; k = 1...15
𝑈.𝑆.
𝐵𝑅
RD = Rank of DK; DK = 𝑛𝑖=1 𝐿𝑇𝐷𝑇𝐸𝑘𝑖
- 𝑛𝑖=1 𝐿𝑇𝐷𝑇𝐸𝑘𝑖
; PRS = Positive rank sum;
NRS = Negative rank sum.
12
Parviz Asheghian
Table 6: The Wilcoxon Test for the Comparison of TDTE Ratios of U.S. and BR Firms
𝑛
𝑛
PAIR
DK
ABS
RD
PRS
NRS
𝐵𝑅
𝑈𝑆
𝑇𝐷𝑇𝐸𝑘𝑖
𝑇𝐷𝑇𝐸𝑘𝑖
𝑖=1
1
*
2
0.53
3
3.26
4
0.16
5
0.05
6
*
7
0.82
8
3.38
9
0.01
10
6.42
11
23.89
12
*
13
0.23
14
1.42
15
4.06
16
0.08
17
0.11
18
0.12
19
0.65
20
0.07
21
*
22
0.52
23
7.20
TOTAL
*Data not available
𝑖=1
5.13
2.75
2.42
0.24
*
0.72
1.93
*
0.59
6.50
9.10
0.85
4.05
3.82
6.20
0.35
0.79
2.97
0.14
9.02
1.56
*
*
-2.22
0.84
-0.08
2.22
0.84
0.08
10
7
2
10
-1.11
1.11
8
8
-0.58
-0.08
14.79
0.58
0.08
14.79
5
2
15
5
2
-3.82
-2.40
-2.14
-0.27
-0.68
-2.85
0.51
-8.95
3.82
2.40
2.14
0.27
0.68
2.85
0.51
8.95
13
11
9
3
6
12
4
14
7
2
15
13
11
9
3
6
12
4
14
T+=26
T-=71
𝑈.𝑆.
𝐿𝑇𝐷𝑇𝐸𝑘𝑖
= LTDTE of the kth U.S. firm in the ith year; i = 1...5; k = 1...15
𝐵𝑅
𝐿𝑇𝐷𝑇𝐸𝑘𝑖
= ROE of the kth BR firm in the ith year; i = 1...5; k = 1...15
𝑈.𝑆.
𝐵𝑅
RD = Rank of DK; DK = 𝑛𝑖=1 𝐿𝑇𝐷𝑇𝐸𝑘𝑖
- 𝑛𝑖=1 𝐿𝑇𝐷𝑇𝐸𝑘𝑖
; PRS = Positive rank sum;
NRS = Negative rank sum.
The Relative Financial Efficiency of BR and U.S. Firms
13
Table 7: The Wilcoxon Test for the Comparison of TATO Ratios of U.S. and BR Firms
𝑛
𝑛
PAIR
DK
ABS
RD
PRS
NRS
𝐵𝑅
𝑈𝑆
𝑇𝐴𝑇𝑂𝑘𝑖
𝑇𝐴𝑇𝑂𝑘𝑖
𝑖=1
1
6.72
2
7.48
3
6.42
4
0.65
5
0.76
6
2.46
7
2.26
8
3.46
9
0.01
10
3.73
11
0.34
12
0.90
13
1.48
14
4.51
15
3.71
16
5.74
17
1.47
18
0.02
19
2.62
20
16.55
21
0.19
22
0.81
23
54.40
TOTAL
*Data not available
𝑖=1
7.41
5.95
6.92
1.76
4.51
4.43
1.24
7.22
0.65
6.33
3.46
1.36
1.58
5.57
13.73
4.60
0.18
3.00
3.71
2.51
*
0.37
0.94
-0.69
1.53
-0.50
-1.11
-3.75
-1.97
1.02
-3.76
-0.64
-2.60
-3.12
-0.46
-0.10
-1.06
-10.02
1.14
1.29
-2.98
-1.09
14.04
0.69
1.53
0.50
1.11
3.75
1.97
1.02
3.76
0.64
2.60
3.12
0.46
0.10
1.06
10.02
1.14
1.29
2.98
1.09
14.04
6
14
4
11
19
15
8
20
5
16
18
3
1
9
21
12
13
17
10
22
0.44
53.46
0.44
53.46
2
7
6
14
4
11
19
15
8
1
5
16
18
3
1
9
21
12
13
17
10
22
2
7
T+=101
T-=133
𝑈.𝑆.
𝑇𝐴𝑇𝑂𝑘𝑖
= TATO of the kth U.S. firm in the ith year; i = 1...5; k = 1...22
𝐵𝑅
𝑇𝐴𝑇𝑂𝑘𝑖
= ROE of the kth BR firm in the ith year; i = 1...5; k = 1...22
𝑈.𝑆.
𝐵𝑅
RD = Rank of DK; DK = 𝑛𝑖=1 𝑇𝐴𝑇𝑂𝑘𝑖
- 𝑛𝑖=1 𝑇𝐴𝑇𝑂𝑘𝑖
; PRS = Positive rank sum;
NRS = Negative rank sum.
14
Parviz Asheghian
Table 8: The Wilcoxon Test for the Comparison of RTO Ratios of U.S. and BR Firms
𝑛
𝑛
PAIR
DK
ABS
RD PRS
NRS
𝐵𝑅
𝑈𝑆
𝑅𝑇𝑂𝑘𝑖
𝑅𝑇𝑂𝑘𝑖
𝑖=1
1
26.89
2
73.36
3
24.71
4
1.66
5
5.10
6
13.56
7
15.48
8
25.36
9
6.56
10
89.21
11
88.81
12
5.04
13
12.23
14
24.29
15
39.08
16
16.37
17
8.66
18
2.88
19
10.10
20
55.17
21
*
22
22.04
23
69.60
TOTAL
*Data not available
𝑖=1
45.55
50.92
42.50
8.09
20.52
14.52
6.99
25.01
4.58
36.47
14.99
11.85
10.04
38.65
110.82
84.86
14.91
15.52
17.42
20.80
*
49.30
12.81
-18.66
22.44
-17.79
-6.43
-15.42
-0.96
8.49
0.35
1.98
52.74
73.82
-6.81
2.19
-14.36
-71.74
-68.49
-6.25
-12.64
-7.32
34.37
18.66
22.44
17.79
6.43
15.42
0.96
8.49
0.35
1.98
52.74
73.82
6.81
2.19
14.36
71.74
68.49
6.25
12.64
7.32
34.37
15
16
14
6
13
2
9
1
3
19
22
7
5
12
21
20
5
10
8
18
-27.26
56.79
27.26
56.79
17
11
15
16
14
6
13
2
9
1
3
19
22
7
5
12
21
20
5
10
8
18
T+=93
17
11
T-=161
𝑈.𝑆.
𝑅𝑇𝑂𝑘𝑖
= RTO of the kth U.S. firm in the ith year; i = 1...5; k = 1...22
𝐵𝑅
𝑅𝑇𝑂𝑘𝑖
= ROE of the kth BR firm in the ith year; i = 1...5; k = 1...22
𝐵𝑅
RD = Rank of DK; DK = 𝑛𝑖=1 𝑅𝑇𝑂 - 𝑛𝑖=1 𝑅𝑇𝑂𝑘𝑖
; PRS = Positive rank sum; NRS =
Negative rank sum.
The Relative Financial Efficiency of BR and U.S. Firms
15
Table 9: The Wilcoxon Test for the Comparison of ITO Ratios of U.S. and BR Firms
𝑛
𝑛
PAIR
DK
ABS
RD
PRS
NRS
𝐵𝑅
𝑈𝑆
𝐼𝑇𝑂𝑘𝑖
𝐼𝑇𝑂𝑘𝑖
𝑖=1
1
51.51
2
34.85
3
36.96
4
7.45
5
8.18
6
5.33
7
11.68
8
26.96
9
0.06
10
27.53
11
16.54
12
4.28
13
16.05
14
8.68
15
57.64
16
21.32
17
11.13
18
1.04
19
12.85
20
38.69
21
7.42
22
37.21
23
0.00
TOTAL
*Data not available
𝑖=1
124.40
79.97
24.13
2.93
7.94
13.02
9.08
480.03
5.05
59.19
9.56
6.35
4.91
24.86
74.74
25.68
*
25.75
20.60
9.45
*
*
26.75
-72.89
-45.12
12.83
4.52
0.24
-7.69
2.60
-453.07
-4.99
-31.66
6.98
-2.07
11.14
-16.18
-17.10
-4.36
72.89
45.12
12.83
4.52
0.24
7.69
2.6
453.07
4.99
31.66
6.98
2.07
11.14
16.18
17.1
4.36
19
18
11
5
1
8
3
20
6
17
7
2
10
12
13
4
-24.71
-7.75
29.24
24.71
7.75
29.24
14
9
16
-26.75
26.75
15
19
18
11
5
1
8
3
20
6
17
7
2
10
12
13
4
14
9
16
T+=53
15
T-=157
𝑈.𝑆.
𝐼𝑇𝑂𝑘𝑖
= ITO of the kth U.S. firm in the ith year; i= 1...5; k = 1...20
𝐵𝑅
𝐼𝑇𝑂𝑘𝑖
= ROE of the kth BR firm in the ith year; i= 1...5; k = 1...20
𝐵𝑅
RD = Rank of DK; DK = 𝑛𝑖=1 𝐼𝑇𝑂 - 𝑛𝑖=1 𝐼𝑇𝑂𝑘𝑖
; PRS = Positive rank sum; NRS =
Negative rank sum.
16
Parviz Asheghian
Table 10: The Wilcoxon Test for the Comparison of QR Ratios of U.S. and BR Firms
𝑛
𝑛
PAIR
DK
ABS
RD
PRS
NRS
𝐵𝑅
𝑈𝑆
𝑄𝑅𝑘𝑖
𝑄𝑅𝑘𝑖
𝑖=1
1
0.45
2
2.19
3
6.20
4
1.80
5
3.81
6
1.57
7
1.69
8
5.41
9
0.13
10
1.43
11
0.04
12
1.99
13
0.57
14
7.65
15
*
16
3.71
17
2.30
18
5.50
19
*
20
9.74
21
*
22
*
23
*
TOTAL
*Data not available
𝑖=1
0.44
3.85
2.05
6.83
*
1.73
2.30
19.86
0.30
3.23
*
0.54
1.92
6.48
4.07
3.63
0.30
1.66
4.86
14.64
*
15.47
2.21
0.01
-1.66
4.15
-5.03
0.01
1.66
4.15
5.03
1
9
13
15
1
-0.16
-0.61
-14.45
-0.17
-1.80
0.16
0.61
14.45
0.17
1.8
3
5
16
4
10
3
5
1.45
-1.35
1.17
1.45
1.35
1.17
8
7
6
8
0.08
2.00
3.84
0.08
2
3.84
2
11
12
2
11
12
-4.90
4.9
14
9
13
15
16
4
10
7
6
14
T+=61
T-=75
𝑈.𝑆.
𝑄𝑅𝑘𝑖
= QR of the kth U.S. firm in the ith year ; i = 1...5; k = 1...16
𝐵𝑅
𝑄𝑅𝑘𝑖
= ROE of the kth BR firm in the ith year; i = 1...5; k = 1...16
𝐵𝑅
RD = Rank of DK; DK = 𝑛𝑖=1 𝑄𝑅 - 𝑛𝑖=1 𝑄𝑅𝑘𝑖
; PRS = Positive rank sum; NRS =
Negative rank sum.
The Relative Financial Efficiency of BR and U.S. Firms
17
Table 11: The Wilcoxon Test for the Comparison of CR Ratios of U.S. and BR Firms
𝑛
𝑛
PAIR
DK
ABS
RD PRS
NRS
𝐵𝑅
𝑈𝑆
𝐶𝑅𝑘𝑖
𝐶𝑅𝑘𝑖
𝑖=1
1
0.65
2
6.06
3
9.06
4
2.07
5
4.16
6
3.86
7
3.19
8
10.32
9
0.23
10
3.37
11
0.15
12
2.16
13
1.29
14
14.47
15
5.97
16
46.48
17
24.98
18
37.07
19
2.68
20
212.38
21
0.11
22
8.01
23
15.47
TOTAL
*Data not available
𝑖=1
1.88
6.46
4.84
9.19
0.07
3.67
3.84
21.14
0.95
5.64
3.51
1.80
5.94
14.93
7.02
5.51
1.04
2.62
7.44
20.36
2.81
19.32
3.09
-1.23
-0.40
4.22
-7.12
4.09
0.19
-0.65
-10.82
-0.72
-2.27
-3.36
0.36
-4.65
-0.46
-1.05
40.97
23.94
34.45
-4.76
192.02
-2.70
-11.31
12.38
1.23
0.4
4.22
7.12
4.09
0.19
0.65
10.82
0.72
2.27
3.36
0.36
4.65
0.46
1.05
40.97
23.94
34.45
4.76
192.02
2.7
11.31
12.38
8
3
13
16
12
1
5
17
6
9
11
2
14
4
7
22
20
21
15
8
3
13
16
12
1
5
17
6
9
11
2
14
4
7
22
20
21
15
23
10
18
19
10
18
19
T+=1331 T-=143
0
𝑈 .𝑆.
𝐶𝑅𝑘𝑖
= CR of the kth U.S. firm in the ith year; i = 1...5; k = 1...23
𝐵𝑅
𝐶𝑅𝑘𝑖
= ROE of the kth BR firm in the ith year; i = 1...5; k = 1...23
𝐵𝑅
RD = Rank of DK; DK = 𝑛𝑖=1 𝐶𝑅 - 𝑛𝑖=1 𝐶𝑅𝑘𝑖
; PRS = Positive rank sum; NRS =
Negative rank sum.
18
Parviz Asheghian
References
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[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
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